Intergenerational Transfers and Wealth in the Euro-Area: The Relevance of Inheritances and Gifts in Absolute and Relative Terms

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractPrivate wealth is a crucial factor for the economic well-being of households. Key determinants of private wealth include intergenerational wealth transfers (gifts and inheritances), which are gaining importance since 1990, as research suggests. We conduct a detailed investigation of the distribution of wealth transfers in eight Euro-area countries. First, we investigate the patterns of prevalence and level of past wealth transfers in the individual countries: Who received transfers, and what is their present value in absolute terms? We find that in most countries the percentages of households with a transfer as well as the mean present value of those transfers is increasing along the distribution of net wealth. Using a series of country-specific multivariate regressions, we find that households with higher income and education levels have both a higher probability of receiving transfers and higher absolute transfer value. We then analyze the present value of transfers as a percent of current net worth. Here, in relative terms, some of the results are reversed, as the relative importance of intergenerational transfers does not increase with the level of wealth or income. Using a fractional logit regression we conclude that for higher income quintiles the share of current net worth due to past intergenerational transfers tends to be decreasing.

How inheritances shape wealth distributions: An international comparison

“…The HFCS is purposefully designed to improve the comparability on wealth accumulation and portfolio choices over European countries. The nationally conducted surveys nonetheless differ in some respect so that we exclude some countries based on recommendations by Tiefensee and Westermeier (2016) and Tiefensee and Grabka (2014):…”

“…Piketty, 2011;Piketty et al, 2013). Economists have recently devoted much attention to the question of how intergenerational transfers affect the inequality in aggregated wealth (Elinder et al, 2016;Boserup et al, 2016;Tiefensee and Westermeier, 2016). Different methodological approaches have so far mainly confirmed previous research in this field: Bequests accrue disproportionally to the benefit of poorer households and thereby tend to reduce relative wealth inequality.…”

Love and Money with Inheritance: Marital Sorting by Labor Income and Inherited Wealth in the Modern Partnership

“…Charles et al (2013) show that controlling for education only accounts for one-quarter of sorting by parental wealth.13Tiefensee and Westermeier (2016) show that a significant lower share among the older cohorts in Germany receive an inheritance compared to that in France.14 SeeGrabka and Westermeier (2014) andBach, Thiemann, and Zucco (2015).…”